If the Entire Banking System Has Total Deposits of $4

question 56

True/False

If the entire banking system has total deposits of $4 billion and a reserve requirement of 5 percent, then the maximum possible amount of loans that the banking system can make equals $2 million.

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Definitions:

Automobiles

Motor vehicles with four wheels designed to transport people; cars are the most common form of these.

Annual Crop

Plants that are sown, grow, are harvested, and die all in one growing season or year.

Supply Curve

A graphical representation that shows the relationship between the price of a good and the quantity of the good that producers are willing and able to sell.

Carrots

In a metaphorical sense, incentives or rewards used to motivate behavior; in a literal sense, a root vegetable typically orange in color.